UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 17788 / October 16, 2002
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1651 / October 16, 2002
, Criminal Action No. 302-CR-178-R, United States District Court for
the Northern District of Texas, Dallas Division.
, Civil Action No. 4 02-CV-0403-A, United States District Court for
the Northern District of Texas, Fort Worth Division (filed April 25,
2002).
On October 3, 2002, Judge Jerry Buchmeyer, United States District
Judge for the Northern District of Texas, sentenced G. Matthias
Heinzelmann, III, the former executive vice president of Surety Bank
of Fort Worth, Texas ("Surety Bank"), to a term of 36 months probation
with six months of home confinement, in connection with an elaborate
scheme through which Heinzelmann used bank customers' money to conceal
bad loans and inflate bank revenues. In addition, the Court ordered
Heinzelmann to pay a $10,000 fine.
Previously, Heinzelmann entered into a plea agreement with the United
States Attorney for the Northern District of Texas, Dallas Division,
pursuant to which he pleaded guilty to one count of conspiracy to make
false entries in the books and records of a bank. By conducting the
scheme, Heinzelmann also violated the federal securities laws. These
violations are the subject of the Commission's pending civil action
against Heinzelmann, filed in the Northern District of Texas, Ft.
Worth Division, on April 25, 2002. In its action, the Commission is
seeking a permanent injunction, an officer and director bar, and a
civil money penalty.
According to the Commission's complaint, from 1996 through September
1999, Heinzelmann, while president and director of Surety Capital
Corporation ("Surety Capital"), a Fort Worth based reporting company
whose sole asset is Surety Bank, a wholly-owned subsidiary, engaged in
an elaborate scheme to conceal loan losses incurred by Surety Bank.
The scheme had a material impact on financial statements included in
Surety Capital's Forms 10-K and 10-Q. Specifically, Surety Capital
overstated its pre-tax income by 7% in 1996, and understated its
pre-tax losses by 16% in 1997 and 97% in 1998. Further, Surety Capital
failed to file its Form 10-Q for the period ending September 30, 1999.
Because of the scheme, Surety Capital failed to make and keep books,
records and accounts that, in reasonable detail, accurately and fairly
reflected its transactions and dispositions of assets. Surety Capital
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
ACCOUNTING AND AUDITING ENFORCEMENT
, Criminal Action No. 302-CR-178-R, United States District Court for the Northern District of
On October 3, 2002, Judge Jerry Buchmeyer, United States District Judge for the Northern
Previously, Heinzelmann entered into a plea agreement with the United States Attorney for the
By conducting the scheme, Heinzelmann also violated the federal securities laws.
These violations are the subject of the Commission's pending civil action against
In its action, the Commission is seeking a permanent injunction, an officer and director bar,
According to the Commission's complaint, from 1996 through September 1999, Heinzelmann, while
Specifically, Surety Capital overstated its pre-tax income by 7% in 1996, and understated its
Because of the scheme, Surety Capital failed to make and keep books, records and accounts
Surety Capital also failed to maintain an adequate system of internal financial controls.
At the time the Commission filed its complaint against Heinzelmann, it simultaneously
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